ACIT 25(2), MUMBAI V. OM CONSTRUCITON, MUMBAI

ITA 6234/MUM/2012

• Counselvise Citation: 623419914 RSA 2012
• Duration Of Justice: 2 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-01-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 11-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREMANAND J
• Assessee Lawyers: VIJAY MEHTA

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE HONBLE S/SHRI H.L. KARWA, PRESIDENT AND B. R.BASKARAN (AM) . . , . . , ./ I.T.A. NO.6234/MUM/2012 ( / ASSESSMENT YEAR :2006-07) ASSTT. COMMISSIONER OF INCOME TAX 25(2), C-11, ROOM NO.108, PRATYAKSHAKAR BHAVAN, BANDRA-KURLA COMPLEX, BANDRA (E), MUMBAI-400051. / VS. M/S OM CONSTRUCTION, 5, SAI SADAN, ROSHAN NAGAR, BORIVALI (W), MUMBAI-400092 ( / APPELLANT) .. ( ! / RESPONDENT) CROSS-OBJECTION NO.264/MUM/2013 ARISING OUT OF ./ I.T.A. NO.6234/MUM/2012 ( / ASSESSMENT YEAR :2006-07) M/S OM CONSTRUCTION, 5, SAI SADAN, ROSHAN NAGAR, BORIVALI (W), MUMBAI-400092 / VS. ASSTT. COMMISSIONER OF INCOME TAX 25(2), C-11, ROOM NO.108, PRATYAKSHAKAR BHAVAN, BANDRA-KURLA COMPLEX, BANDRA (E), MUMBAI-400051. ( / APPELLANT) .. ( ! / RESPONDENT) ./ #$ ./ PAN/GIRNO.:AAAFO9196K % / APPELLANT BY : SHRI PREMANAND J ! & % /RESPONDENT BY : SHRI VIJAY MEHTA. ' ( & ) * / DATE OF HEARING : 1.1.2015 +, & ) * /DATE OF PRONOUNCEMENT : 9.01.2015 ITA NO.6234/M/12 CO NO.264/MUM/2013 2 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION F ILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 06-07-2012 PAS SED BY LD CIT(A)-35, MUMBAI AND THEY RELATE TO THE ASSESSMENT YEAR 2006- 07. 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD C IT(A) IN DELETING THE ADDITION RELATING TO ON-MONEY RECEIPT OF RS.1,40,00 ,000/- AND INSTEAD ESTIMATING THE NET PROFIT THEREON. IN THE CROSS OBJECTION, THE ASSESSEE IS SUPPORTING THE DECISION OF LD CIT(A). 3. WE HEARD THE PARTIES AND PERUSED THE RECORD. TH E ASSESSEE IS A MEMBER OF GANGAR GROUP AND IS ENGAGED IN THE BUSINESS OF B UILDERS AND DEVELOPERS. THE REVENUE CARRIED OUT SURVEY OPERATIONS AT THE BU SINESS PREMISES OF THE ABOVE SAID GROUP. DURING THE COURSE OF SURVEY OPERATIONS , IT WAS NOTICED THAT THE ASSESSEE COMPANY HAVE BEEN RECEIVING MONEY OUTSIDE THE BOOKS OF ACCOUNT RANGING FROM 40% TO 55% OF THE SALE AGREEMENT VALUE . FURTHER THE GANGAR GROUP OF CASES ALSO ADMITTED ADDITIONAL INCOME OF R S.5.00 CRORES AT THE TIME OF SURVEY OPERATION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER DETERMINED THE ON-MONEY RECEIPTS AT RS.1.40 CRORES AND ASSESSED THE SAME AS INCOME OF THE ASSESSEE. 4. IN THE MEAN TIME, THE ASSESSEE AS WELL AS OT HER GROUP CONCERNS FILED SETTLEMENT PETITION BEFORE THE HONBLE SETTLEMENT C OMMISSION. THE ASSESSEES PETITION FILED FOR AY 2005-06 WAS ADMITTED. THE OR DER WAS PASSED BY THE SETTLEMENT COMMISSION SUBSEQUENTLY, I.E., SUBSEQUEN T TO THE DATE OF PASSING OF ASSESSMENT ORDER. IN ITS ORDER, THE SETTLEMENT COM MISSION ACCEPTED THE CONTENTIONS OF THE ASSESSEE THAT THE IMPOUNDED PAPE RS ITSELF SHOW THAT THERE ARE NUMEROUS INSTANCES OF UNACCOUNTED EXPENSES AND ALSO THE BUILDERS HAVE TO INCUR LOTS OF EXPENSES OUTSIDE BOOKS OF ACCOUNT. T HE ASSESSEE HAD OFFERED PROFIT @ 12% OF THE UNDISCLOSED RECEIPTS. IT WAS FURTHER SUBMITTED THAT THE ABOVE SAID NET PROFIT AMOUNT ALONG WITH THE VALUE OF SCRAP SAL ES AND ADHOC DISCLOSURES WORK OUT TO MORE THAN 35%. THE HONBLE SETTLEMENT COMMI SSION ACCEPTED THE SUBMISSIONS OF THE ASSESSEE AND ACCORDINGLY UPHELD THE ESTIMATION OF NET PROFIT AT 12% OF THE ON-MONEY RECEIPTS IN ASSESSMENT YEAR 2005-06. ITA NO.6234/M/12 CO NO.264/MUM/2013 3 5. IN THE APPEAL FILED BY THE ASSESSEE BEFORE L D CIT(A) CHALLENGING THE ASSESSMENT ORDER OF AY 2006-07, THE FIRST APPELLATE AUTHORITY CONSIDERED THE ORDER OF THE HONBLE SETTLEMENT COMMISSION AND ACCO RDINGLY HELD THAT THE NET PROFIT CALCULATED AT 12% (IT WAS STATED THAT IT WAS WRONGLY MENTIONED AS 17% BY LD CIT(A)) ON THE ON-MONEY RECEIPTS SHOULD ONLY BE ASSESSED. THE REVENUE IS AGGRIEVED BY THIS DECISION. 6. WE HAVE ALREADY NOTICED THAT THE HONBLE SET TLEMENT COMMISSION HAS ACCEPTED THE CONTENTIONS OF THE ASSESSEE THAT IT HA S INCURRED EXPENSES OUTSIDE THE BOOKS OF ACCOUNTS AND FURTHER THE IMPOUNDED MAT ERIALS ALSO SHOW THAT MANY EXPENSES HAVE NOT BEEN ACCOUNTED FOR. UNDER THESE SET OF FACTS, THE HONBLE SETTLEMENT COMMISSION HAS ACCEPTED THE CONTENTION O F THE ASSESSEE THAT ONLY NET PROFIT SHOULD BE ESTIMATED ON THE AMOUNTS RECEI VED OUTSIDE THE BOOKS OF ACCOUNT. ACCORDINGLY, THE HONBLE SETTLEMENT COMMI SSION HAS ESTIMATED THE NET PROFIT AT 12% OF THEREON. THE ASSESSMENTS OF AY 20 05-06 AND ALSO THE YEAR BEFORE US, VIZ., AY 2006-07 HAVE BEEN TAKEN UP FOR SCRUTINY ONLY ON THE BASIS OF SURVEY OPERATIONS AND HENCE THE FACTS PREVAILING IN BOTH THE CASES ARE IDENTICAL IN NATURE. HENCE, WE DO NOT FIND IT NECESSARY TO T AKE A DIFFERENT VIEW FROM THAT ONE TAKEN BY THE HONBLE SETTLEMENT COMMISSION. AC CORDINGLY, WE ARE OF THE VIEW THAT THE LD CIT(A) WAS JUSTIFIED IN ESTIMATING THE PROFIT AT 12% (IT IS STATED THAT THE RATE OF PROFIT WAS WRONGLY MENTIONED AS 17 % IN THE ORDER OF LD CIT(A)). 7. DURING THE COURSE OF HEARING, THE LD D.R SUB MITTED THAT THERE IS A REFERENCE OF 35% IN THE SETTLEMENT COMMISSIONS ORDER. HOWEV ER, ON A PERUSAL OF THE SAID ORDER, WE NOTICE THAT THE ASSESSEE HAS GIVEN A WORK ING OF THE PROFIT OF THE PROJECT BY CONSIDERING THE VALUE OF SCRAP SALES AND ADHOC D ISCLOSURE IN ORDER TO SUBSTANTIATE THE OFFER OF 12%. HENCE, IN OUR VIEW, THE SAID REFERENCE OF 35% IS NOT RELEVANT HERE. 8. IN VIEW OF THE FOREGOING DISCUSSIONS, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER PASSED BY LD CIT(A). 9. THE CROSS OBJECTION HAS BEEN FILED BY THE AS SESSEE ONLY TO SUPPORT THE ORDER OF LD CIT(A). SINCE WE HAVE CONFIRMED THE OR DER OF LD CIT(A), THE SAME DOES NOT REQUIRE ANY ADJUDICATION. ITA NO.6234/M/12 CO NO.264/MUM/2013 4 10. IN THE RESULT, THE APPEAL OF THE REVENUE AN D THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE O PEN COURT ON 9TH JAN,2015 . +, ' - ./ 0 1 9TH JAN 2015 , & 2( 3 SD SD ( . . / H.L. KARWA) ( . . , / B.R. BASKARAN ) / PRESIDENT / ACCOUNTANT MEMBER . ' ( MUMBAI: 9TH JAN, 2015. . . ./ SRL , SR. PS ! ' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT. 3. ' 7) ( ) / THE CIT(A)- CONCERNED 4. ' 7) / CIT CONCERNED 5. 6. 89 2 ): , * : , . ' ( / DR, ITAT, MUMBAI CONCERNED 2 ; < ( / GUARD FILE. = ' / BY ORDER, TRUE COPY > # (ASSTT. REGISTRAR) * : , . ' ( /ITAT, MUMBAI